Insurance Law

Updates on Scruggs v. Jones hearing, April 16

By David Rossmiller

THIRD UPDATE:

Here is the scheduling order entered by Judge Coleman, allowing discovery on damages, and setting a hearing on that issue for November 12.

Also, here is a story from Holbrook Mohr of the Associated Press, where Jim Hood "denies his predecessor delivered a warning that a wealthy lawyer would fund an opponent in last year's election if Hood didn't cooperate in Hurricane Katrina litigation."  Not sure if that matches the headline: "AG denies being pressured in Katrina cases."  The way the story reads, Hood denies only that Moore delivered the message -- Hood does not say he received no pressure.      

Finally, I liked this post by Alan Lange over at Y'all Politics about Mike Moore's comments.

SECOND UPDATE:

Here's the order of default judgment as a sanction, done in the usual way, by striking the answer and all responsive pleadings. The order also allows plaintiffs' attorney fees since July 17, 2007, without prejudice to the main attorney fee claim contained in the complaint.

UPDATE:

Many thanks are due to the ICLB Irregulars, those who supply information without asking for public acknowledgment, indeed while preferring to remain anonymous while doing the people's work.   Such is ICLB's Oxford correspondent, with the latest dispatch from the courtroom -- a default judgment was entered against the defendants as a sanction for improper conduct in the Jones v. Scruggs litigation.

Findings of the Court:

Implication is drawn from Scruggs’s pleading of Fifth Amendment. Court finds that in March 2007 at the law offices of Scruggs Law Firm, Balducci and members of Scruggs Law Firm agreed to use Balducci’s friendship with Judge Lackey for a favorable decision in a pending suit. Balducci met with Judge Lackey and attempted to persuade him to enter summary judgment for defendants with the understanding that he would make Judge Lackey of counsel at his law firm upon retiring. Judge Lackey recognized this as improper and subsequently reported the incident to federal justice authorities.

Thereafter Judge Lackey worked with the FBI to aid the investigation and to gather evidence that the “attempt to influence” developed into a conspiracy of Richard Scruggs, Zach Scruggs, Sid Backstrom, Tim Balducci and Steve Patterson to bribe Judge Lackey was carried out.

Plaintiffs' motion for sanctions should be granted. Actions justify harsh sanctions. Pleadings and answer are stricken. Default entered in favor of the plaintiffs.

Hearing will be held in the future to determine amount of fees due plaintiff due under joint venture agreement. Damages will include attorney fees and expenses subsequent to hearing on July 17 (Okolona hearing) before Judge Lackey on defendants’ motion to enforce arbitration. Punitives will be considered

The judge asked if either side had questions. 

Grady Tollison, for plaintiffs, said that he had a scheduling order that they had drafted.

Cal Mayo, for defendants, asked for clarification about the punitives. The judge stated that he was entering a default on punitive damages for which he found a violation. He did not consider actions prior to the filing of the complaint. The punitives are for the finding of bribery and conspiracy to corruptly influence Judge Lackey. The default doesn’t extend to punitives on the face of the complaint, but the judge will allowed punitives to be argued at the hearing. The allegations in the complaint were not sufficient on their face to award general punitives.

Attorney fees limited to hearing date of Judge Lackey (I believe he was referencing the July 17 Okolona hearing) and after. Arbitration contract applied after the filing of complaint up until alleged improper action and that time period should not be applicable for the attorney fees.

The judge said that Percy, one of the attorneys for the plaintiff, had submitted an order that the court found acceptable with certain revisions. The plaintiff's attorneys conferred and accept as revised. Mayo had a couple of suggestions. The court will return at 10:30 to iron out details of the order.

Plaintiff John Jones told one reporter, “not about money… about the fact that penalties have to send a message to the entire bar, to the public, that you can't tamper with the integrity of our system of justice.” 

  

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Expecting word from the courtroom soon -- actually, I have word from the courtroom but want to make sure I understand what happened before passing it on.  

In the meantime, let's look at this update from Patsy Brumfield of the Daily Journal about yesterday's testimony by Judge Lackey, in which former Mississippi AG Mike Moore says he was "appalled" by what Lackey said.  If you remember, Lackey said he didn't go to AG Jim Hood with his qualms about the overtures by Tim Balducci because of what he heard about Scruggs putting heat on Hood, with Moore's involvement, so that Hood would help settle cases against State Farm.  Specifically, the heat purportedly was in the form of threatening to run a candidate against Hood in the primary if Hood didn't dance to the right tune. 

"Judge Lackey either is very confused or he made up the story out of whole cloth," Moore said.

"Jim Hood is a very, very close friend - he worked for me, supported me in my first campaign. I encouraged him to take my place."

Moore, who represents Scruggs' son Zach on his criminal charges in the Lackey bribery attempt, said he had an investigator interview Stallings and he made no mention of the conversation with Lackey.

"On the contrary, he told Lackey to call the AG's office," Moore added.

He also showed the Daily Journal a text message he had just received from Stallings, which confirmed the story.

Was Moore surprised to hear Lackey's accusations from the stand Tuesday morning?

"Sure, I was appalled," he said.

Moore also noted he, as attorney general, had removed Patterson from office as state auditor and prosecuted him.

"I of all people would not have anything to do with Steve Patterson," he noted.

Questions:

• What exactly did the text message say? 
• Will Moore be willing to share it with the public, say, by posting a copy of it on his law firm's website?  Did Moore get Stallings permission to show his text message to third parties?
• When it says "confirmed the story," what story was confirmed? According to Moore, Stallings said to contact the AG's office.  Does that mean that Stallings did not relate the story about Hood being pressured? Does it mean he did relate that story but said to contact the AG anyway? Does it mean that he related the story but did not claim any involvement by Moore?  Does it mean that Stallings said Lackey's testimony was entirely false? 
• If the text message confirmed something, why don't we know verbatim what the message said, and if a message from Moore to Stallings preceded it, why don't we have a verbatim accounting of what that message said?  Since Stallings is a Mississippi public official, these text messages should be accessible through a Public Records Law request. 
• Something about the Moore remarks strikes me as something less than a categorical denial that Hood received pressure from Scruggs to help settle the cases, or at the least, that Scruggs intended to or tried to assert such pressure. When Moore says he wouldn't have anything to do with Patterson, does that also mean he wouldn't have anything to do with Balducci?  If Scruggs wanted or intended to pressure Hood to bring about that result, even if Hood wasn't aware of it, was Moore aware of it in any way?
• Is it wise to call Lackey out as either confused or a liar? This was tried, with a distinct lack of success, by Scruggs' defense in the bribery case.  What motive would Lackey have to lie?
• If Lackey is confused, can Moore say with confidence the investigation would have turned out the same way had Lackey actually gone to the AG's office? I mean, Hood showed a draft of his own civil lawsuit against Katrina insurers to Scruggs for his input within days after Katrina hit, he worked closely with Scruggs on such matters as the Rigsby documents and considered Scruggs his confidential informant.  It's not like we lack evidence, outside of the evidence of Lackey's testimony yesterday, that Hood and Scruggs were tight.  Who will say with a straight face that Lackey's fears about going to the AG's office were delusional?  It would take a lot of Hoodzpah to make such a claim.     

Full post as published by Insurance Coverage Law Blog on April 16, 2008 (boomark / email).